The costs of raising your child from birth to the age of maturity in your state have become increasingly more expensive, with estimates of nearly a quarter of a million dollars, not including saving and financially planning for higher education costs.1 Keeping this figure in mind, as a separated or divorced parent, it is imperative that you make arrangements for child support, as well as spousal support, to ensure that your family’s financial needs are suitably met.
Enlist the guidance of an experienced family law attorney and seasoned divorce financial planner to become familiarized with child custody, alimony, and related support issues and guidelines, which vary from state to state. By considering the advice of these experts, you can understand and apply the following divorce insights to protect your family’s interests and appropriately address your wishes relating to spousal and child support:
Understand important ramifications regarding alimony to determine whether you will be eligible to receive spousal support
- Detailing how your assets and debts are partitioned, your divorce settlement agreement will also separately address spousal and child support plans. As a means of structuring ongoing monthly contributions between you and your divorced spouse, alimony payments are an integral divorce and family planning component in sustaining marital standard of living and keeping post-marital peace.
- Foremost, follow your state law and provisions to assess factors impacting your entitlement to receive alimony. Recognizing that no two specific cases are the same, you should also seek the guidance of a certified divorce financial analyst to evaluate your financial needs, your different support scenarios, and your divorced spouse’s ability to pay alimony.
Consult with a qualified tax professional to inform you on the seven alimony requirements that need to be made and the federal income tax implications encompassing your spousal support situation. Be cognizant of the income tax ramifications, whether you are receiving or paying alimony.
Know specific child support considerations and approximate extent of your support payments
- While child support rules also vary from state to state, you should be aware that child support payments are an enforced legal obligation served to provide life’s necessities for your children and to promote a healthy relationship and involved interest in their lives. With the assistance of a legal professional and divorce financial planner, fully acquaint yourself with recording your monthly child support payments to facilitate essential documentation and compliance with child support orders.
- How much child support should you pay and can the amount you owe change? Understand that your state court guidelines and order will decide the amount of child support you will pay after evaluating you and your divorced spouse’s completed financial statements, standard of living, and level of responsibility of child custody. Also, note that depending on state law, court orders may be modified when there is a significant change in circumstances to assure that your kids receive needed economic support. Most pivotally, realize that your obligation from a divorce to pay child support is not dischargeable in bankruptcy.
- Help financially plan for your children’s secondary and higher education by being knowledgeable of your state’s divorce laws relevant to secondary child support. Do keep your children’s best interests in mind when addressing your children’s college finances in the legal progress.
- Do not confuse the income tax consequences of alimony with the federal tax implications of child support payments. Child support is a tax-free transfer between ex-spouses. Alimony is taxable to recipient and tax-deductible to payor. To become better informed on these child custody, support, and alimony insights, utilize the invaluable expertise of a divorce financial planner and competent tax professional to optimally strategize your post-divorce financial and tax planning.
Do not go through this process of financially fulfilling your legal spousal and child support obligations alone. Empower yourself to deal with this post-divorce transition by having a positive disposition and also receiving emotional counseling. Consider joining professional divorce support forums and groups, along with finding a divorce financial planner to address concerns.
Clearly, by utilizing these sensible pointers, you can wisely manage your money matters and amicably preserve your family’s well-being.
1 2009 United States Department of Agriculture Report: Expenditure on Children by Families; also, cited in Sue Shellenbarger’s June 10, 2010, Wall Street Journal feature, “The Cost of Raising a Child Ticks Up.”
FPA member Elaine King, CFP®, CDFA™, is the Author of Family & Money Matters. FPA member Philip Herzberg, CFP®, MSF, is Director of Media Relations & Public Awareness for FPA of Miami-Dade.